Eurasia: 2015 in recap

A Fragile year for Eurasia: the domino effect?

The year of 2015 can be easily considered as one of the most fragile periods in the Post-Soviet region. Eurasian states have become less united, less competitive, more hostile and more indecisive – both in their domestic and foreign policy. In the past decades the region has not been the strongest entity due to its conflicting regional goals and geopolitical paradigms, however today, Eurasian integrity is threatened by the internal dissatisfaction within the states and by the external negative forces such as rising terrorism, economic sanctions against the regional hegemony, and most importantly – by the conflict in Ukraine. Such tendencies brought the region into a highly turbulent zone. This period can portray possible future scenarios by revealing the region’s weaknesses and strengths, as well as their capabilities.

In February of 2o14, Russia and Ukraine engaged in a conflict over the Crimean peninsula. Such behavior has led to a rising hostility between Putin and his Western counterparts. Therefore, the status of the post-Soviet political actors has been diminished in the world’s political system. However, not only the political status of Eurasia was damaged but also various types of sanctions imposed on Russian and Ukrainian business elites and industries have altogether degraded the economic balance of Central Asia and caused a high level of instability in the region. As a result of Kremlin’s chaotic and unforeseeable decisions in the world affairs, Eurasia has experienced a solid domino effect of economic, social and political instabilities. However, apart form having an economic impact, those sanctions became crucial political determinants as well.

Photo Credit: Kremlin Press

Another domino effect that has shaken Eurasia – is the devaluation of national currencies. With the collapse of the Soviet Union, states have preferred to base their economies on the export of oil and gas without the diversification of industries. However, the 2015 decline of oil and gas’ prices has demonstrated once again that the Post-Soviet states, especially Russia and Kazakhstan, should have expanded their industries. The diminishing prices have negatively contributed to the internal balance of the oil based national economies. It has led to the devaluation of the ruble and the tenge. Today, national currencies have lost their value and are recognized as the weakest currencies in the world. “Kazakhstan’s national currency started the year with an exchange rate of 180 tenge to $1, but as the year drew to a close the rate was around 330-250 tenge to $1.”

***

Today, the EEC already includes Armenia and Kyrgyzstan. Most business elites in the party countries are not clearly informed about the benefits of this Union, but it is becoming clearer that trade with Russia for such immature economies as Kyrgyzstan – is a hard task and sometimes seems impossible. According to Aktilek Tungatarov, head of the International Business Council, business lobby groups are “very anxious about the upcoming integration. Our leaders cannot explain what the benefits are.” Is it realistic that the EEC only pursues economic goals? Today it seems that the EEC is an alternative to the Soviet Union with mostly Russia’s legacy and interests. Therefore, the prospect of this union seems extremely unclear.

Photo by The International Center for Strategic Analysis

As a result of the various world storms, the Eurasian region has faced significant losses and instabilities. The prospects for 2016 in Eurasia are also not too positive, it seems that the region will experience imbalance and chaos. Affected by the consequences of Russia’s foreign policy on the international arena, its counterparts in Eurasia will have to find ways to adjust to the consequent side effects.

Note: Throughout 2015, Central Asia had welcomed top foreign officials including Secretary of State John Kerry, Japan’s Prime Minister Shinzo Abe, and the President of Afghanistan Ashraf Ghani, each pursuing an investment and cooperation incentive in the region.